Fair Market Value in Machinery and Equipment Appraisals
The fair market value of machinery and equipment in appraisals is typically estimated for an asset that is going to be in continued use or installed. The term fair market value reflects the idea that a buyer will pay a reasonable amount for the machine or piece of equipment without any compulsion and with full knowledge of the relevant facts associated with asset. This appraisal amount includes the direct costs associated with the machine as well as the installation costs and other direct and indirect costs to make the equipment fully functional. Machinery appraisers will analyze data from other sales to develop an appraisal value.
There is a chance that a machinery and equipment assignment may require that the appraiser estimated the fair market value for the removal for a similar or alternative use. Fair market value can also be estimated for liquidation situations. Liquidation situations can be broken down even further to be orderly liquidation values or forced liquidation values, both of which would typically have different conclusions.